What causes the IRS to audit you?
While the new funding is intended to improve customer service and technology, experts warn that it could result in more IRS audits.(Photo: Top Tax Defenders)
The IRS Has Increased Audits And Scrutiny.
The tax season is well underway, and since Congress funded the IRS with nearly $80 billion in funding in August, many people are concerned about increased scrutiny and an increase in audits.
Although the new funding aims to enhance technology and customer service, experts caution that it may also result in more IRS audits.
Recent data from Syracuse University’s Transactional Records Access Clearinghouse indicates that during the fiscal year 2022, the IRS audited 3.8 out of every 1,000 returns, or 0.38%. While audits are not common, there are some actions that could result in one.
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The three-year statute of limitations for an IRS audit typically begins when you file.
On the other hand, there is no deadline when the agency is investigating tax fraud.
The IRS typically compares each return to others with comparable income using software, giving each one a numeric score, with higher scores more likely to result in an audit.
The Most Common Warning Signs Of An IRS Audit.
Here are some warning signs that could make an audit more likely:
Greater credits or deductions than income.
For instance, if you made $100,000 and deducted $70,000 for charitable purposes, your return might be flagged.
Missing Income
What has been reported by employers and financial institutions must be reflected in your return. Wait to file until you have all of your supporting documentation, and then double-check that the information you entered is consistent with the forms.
Refundable Credits
Since filers can still receive the tax credit even if there is no balance owed, the IRS examines refundable tax credits more carefully.
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